When stock is valued at amounts substantially greater than the value of the assets transferred to the corporation,it is called
A)no par stock.
B)watered stock.
C)par value stock.
D)preferred stock.

Question

Quizplus · Accepted Answer

When stock is valued at amounts substantially greater than the value of the assets transferred to the corporation, it is called watered stock. This means that the stock is over-priced and shareholders have paid more than the actual value of the assets, resulting in a false or inflated value. No par stock does not have a designated value, par value stock has a fixed value per share, and preferred stock has priority over common stock in receiving dividends and assets upon liquidation.

When Stock Is Valued at Amounts Substantially Greater Than the Value